Not surprisingly, the more detailed Boehner proposal presented to the White House was rejected and the game goes on. Imagine what our Founding Fathers would think of this process after they created a document with specific enumerated powers.

I digress to monetary policy where the Reserve Bank of Australia cut interest rates by 25 bps to 3% as expected. Their benchmark rate is back to the lows of April thru Sept ’09. The key difference between the RBA and other central banks though is their desire to keep REAL interest rates positive as they have for at least the last 20 years. In their release they said “Global growth is forecast to be a little below average for a time. Risks to the outlook are still seen to be on the downside…” Notwithstanding the cut, the Aussie$ is matching the highest level vs the US$ since mid Sept. The euro heavy Dollar index itself is at a 6 week low.

In the ‘other’ category, the Shanghai index rallied off the lowest level since Jan ’09 by .8% and euro zone PPI rose 2.6% y/o/y vs 2.7% in Sept and compares with the 2.5% that was expected. Data wise in the US, today is the quiet before the important jobs data over the next 3 days and the ISM services index.

Category: MacroNotes, Think Tank, Uncategorized

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

8 Responses to “Fiscal negotiations/RBA/other”

  1. RW says:

    The Republican counter-offer had the same kind of detail the Ryan Budget did which is to say no detail where it counted and what little detail there was didn’t add up mathematically: IOW another con-job, all show, no substance, but you can trust us anyway. I’m not sure Alexander Hamilton would have approved.

    That aside, it would be excellent news of the $USD fell against other currencies right now: Our exports would be more competitive and business’s might start doing some more hiring. It would help if Congress did their job of course.

  2. rd says:

    Actually, the system is working which is the point of the three-way balance of the Constitution. The problem is that the people aren’t working well within the system, but that has happened in the past and will pass with time. The alternative would be what Morsi is doing in Egypt where he is looking to achieve maximum governing efficiency.

    Ultimately, I think a lot of people wouldn’t mind the December 31 deadline passing so that the Grover Norquist stranglehold on national economic and financial policy can be broken. After 1/1 passes, then the Republicans can vote for almost anything the Democrats will propose and still achieve a tax cut from the current existing tax law. Real compromise could occur then, which can’t happen now.

  3. Neil C Denver says:

    The most appropriate starting point for compromise is Obama’s handpicked bipartisan Commission on Fiscal Responsibility and Reform. Their recommendations are as follows:

    • Achieve nearly $4 trillion in deficit reduction through 2020, more than any effort in the nation’s history.

    • Reduce the deficit to 2.3% of GDP by 2015 (2.4% excluding Social Security reform), exceeding President’s goal of primary balance (about 3% of GDP).

    • Sharply reduce tax rates, abolish the AMT, and cut backdoor spending in the tax code.

    • Cap revenue at 21% of GDP and get spending below 22% and eventually to 21%.

    • Ensure lasting Social Security solvency, prevent the projected 22% cuts to come in 2037, reduce elderly poverty, and distribute the burden fairly.

    • Stabilize debt by 2014 and reduce debt to 60% of GDP by 2023 and 40% by 2035.

    Compromise doesn’t start off by championing either the Left-Wing or Right-Wing extremists.

    Starting with the ideas or either the extreme Left of extreme Right is not in the best interest of our country.

  4. AnnaLee says:

    Neil C Denver,

    Technically, what you say is not true. It is true that this is the stuff Simpson and Bowles espouse but, no the “Committee”, appointed by the President or not, disbanded without coming to an agreement. There is no Committee recommendation or report.

  5. 873450 says:

    Neil C Denver Says:
    “The most appropriate starting point for compromise is Obama’s handpicked bipartisan Commission on Fiscal Responsibility and Reform. Their recommendations are as follows:”

    Erskine Bowles:
    Speaker Boehner misconstrues my testimony before Congress – That was then – It was a “midpoint” not a “plan” or a “recommendation” – “circumstances have changed” – Today the middle ground is different.

    “While I’m flattered the Speaker would call something “the Bowles plan,” the approach outlined in the letter Speaker Boehner sent to the President does not represent the Simpson-Bowles plan, nor is it the Bowles plan. In my testimony before the Joint Select Committee on Deficit Reduction, I simply took the mid-point of the public offers put forward during the negotiations to demonstrate where I thought a deal could be reached at that time.

    The Joint Select Committee failed to reach a deal, and circumstances have changed since then. It is up to negotiators to figure out where the middle ground is today. Every offer put forward brings us closer to a deal, but to reach an agreement, it will be necessary for both sides to move beyond their opening positions and reach agreement on a comprehensive plan which avoids the fiscal cliff and puts the debt on a clear downward path relative to the economy.”

    Just saying you aren’t a slave owned by 1% afraid of slave master Grover’s whip doesn’t mean you aren’t their slave afraid of his whip.

  6. ilsm says:

    “Imagine what our Founding Fathers …….”

    Do you mean the ones whose traditional American values uncluded owning people?

  7. ilsm says:

    Neil C Denver,

    With all the austerity blowing in the wind why has no one noticed that the Germans and real Austrian neighbors are not at all keynesian about their war profiteers? The Germans spend 1.6% of their GDP while the US spends 5.4%.

    A lot of austerity for war profiteers is in order. Give Simpson Bowles a rest it was never approved by the drafting committee. For good reason!

    All that good stuff you said would be achieved by cutting war to 2% (from >5%) of GDP with no impact on SS or federal medicine outlays, while keeping SS “solvent”, whatever that means to the payroll tax system which has lent more than twice what the Peoples’ Republic has lent for war profits and tax cuts.

  8. sherparick says:

    Well, by the 3rd Congress they were fighting with knives on the floor of the House and Jefferson and Hamilton were accusing the other (to their friends) that the other was conspiring treason. Even in the First Congress, Hamilton had this debate with Madison and Jefferson about the “assumption of state debts” and the founding of the “Bank of the United States” (forerunner of the Federal Reserve), neither of which was part of the “enumerated powers” within Article I, but which Washington and most Federalists believed were “necessary and proper” to accomplish those enumerated powers and “promote the General Welfare.” The fact is neither Hamilton nor Jefferson believed in Austrian economics, which is understandable since those concepts were 120 years on the future. Hamilton was a pragmatic mercantilist and Jefferson was an anti-capitalist agrarian slaveholder.

    Just a suggestion Peter, try to make your arguments on the merits, rather than resort to propagandistic non sequiters and meme spreading.

    By the way, Conservatives and libertarians may now have buyer’s (or rather non-buyer’s) remorse for not taking Obama’s offer in the summer of 2011, or working out a deal with minor tax increases and huge spending and entitlement cuts (thereby immiserating millions of people over the next 10 years) in the autumn of 2011 in Congress. But they did not because “NO TAX INCREASES” was apparently something that they believed the Founders had just forgotten to put into the Constitution (when of course movement of 1787 to create the Constitution and replace the Articles of Confederation was to create a national government that could tax and pay public debts incurred for “the Common Defense and promote the General Welfare.”) But the election went against them, and now all those lovely Bush tax cuts are about to disappear after December 31, 2012. Then we will get austerity with a vengenance, and it will be interesting to see what happens to prices as demand takes another hit. At least that is the Keynesian model. What does Austrian model say will happen?